November 03, 2007

HousingPANIC Stupid Question of the Day


Anyone stopping by new home developments and open houses just for fun?

You know, do the P/E math with the listing agent, chit-chat about the housing crash, ask about the massive incentives and fire-sale pricing, and talk about maybe making an offer for 50% off?

30 comments:

brian said...

I do it every Sunday.

I am a traveling evangelist for Our Lady of Crashing Prices.

I chat the Realtors(r) up and get their take on the market. Some are gloomy, some exhibit a kind of grim optimism, and some are delusional.

After they get done explaining why now is a great time to buy, I agree - and then tell them why LATER will be an even better time to buy. Some argue, some see the point, etc.

Ultimately it is about:
1)Price
2)Price
3)Price
4)Condition

My argument is always this:

The average person needs to be able to afford the average home using a normal mortgage and without spending 60% of their pretax money on housing. When that condition is achieved, THEN we will return to a normal market.

I meet a lot of bottom-callers, of course. They are the heretics of my church - the false prophets (profits?).

They risk the inquisition, where - I pepper them with questions about economics and finance. That's when they realize that I am an educated consumer. I do it Columbo style; 'scuse me sir, I have just one more question, if you don't mind...

Watching a bottom-caller squirm is better than a lap dance.

Brian

Carol said...

Keith,
If you can believe it, we used to visit housing developments just for fun. Once we became serious investors, that changed. I started picking up the freebie magazines, marking the possiblities, calling the offices, then visiting only when I was sure that I'd be placing a deposit. Remember when most builders stopped selling to investors! Ha! Now they practically put up signs inviting us in--but why would I want to stop and fill the time for a bored agent? They can blame investors all they want for the downturn in the market, but we're the ones they use as needed. Please visit my blog, "Overcoming Real Estate Losses" at http://WhineCountryRealEstate.blogspot.com/

Anonymous said...

Keith,
Why dont you be the first to cover the fact that gold was at an all time high yesterday?

Anonymous said...

Greedy home builders have to stop destroying the planet and economy. There is simply too much inventory. The "boom" years (2002-2006) are gone forever.

Anonymous said...

50% is NOT ENOUGH reduction for my.
money. I will only negotiate UP from land value and not DOWN from retail. Figure labor at illegal Mexican rates and materials at discount center wholesale prices. After all, I'm going to rent it to turd worlders for cash (to claim a larger than actual loss)and I will have to remodel after they leave or are thrown out.

Some days you're the Dog and other days you ar the HYDRANT.

REALTORS and DEVELOPERS are HYDRANTS, they get PISSED ON for GOOD REASON.

ABUSE A REALTOR TODAY. THEY DESRVE IT.

Death of the American Dream

art said...

I live way out in the sticks. The developers have empty subdivisions and upcoming $4 per gallon gas should drive a stake through their hearts.

Cow_tipping said...

Yup.
Cool.
Cow_tipping.

funnominal said...

Ha Ha...'to the victor belongs the spoils', or 'he who laughs last...etc'.
Just a congratulatory note to Mr. Keith for his being the lone wolf and now the leader of the pack.
Thanks for your prescience, way ahead of the academics, certainly way ahead of the re 'industry'.
And for your humor...HP is always the first place I 'hit', before WSJ, before Drudgereport etc.
My best wishes
Funnominal

greyhound said...

9 lot developement. 4 Lots built out. 1 apparently sold. Other 3 90-99% finished. Work has stopped. Original asking price 499K. Now asking 459K. These are well built 2800sf, homes by a respected developer on 3+ acre wooded lots. Homes are 20 miles from my ideal area however the homes are easily 100K more home than local area and priced 100K less. Lot of pressure from wife. Wants to offer 429K. Thoughts?

FlyingMonkeyWarrior said...

HP is always the first place I 'hit', before WSJ, before Drudgereport etc.
My best wishes.

______________________________

Yea, me too, Keith, even though sometimes you are a wanker, your HP rocks..

and


Homes are 20 miles from my ideal area, Thoughts?
_________________________________

There is no Castle or McMansion or acreage, no matter how great of a deal it is, that is worth 20 miles away from 'my ideal area', no matter the price.
No way.
But that is me.
I can not put a price on minutes of my life lost in a commute.

Anonymous said...

I do it every Sunday.

I am a traveling evangelist for Our Lady of Crashing Prices.

I chat the Realtors(r) up and get their take on the market. Some are gloomy, some exhibit a kind of grim optimism, and some are delusional.

After they get done explaining why now is a great time to buy, I agree - and then tell them why LATER will be an even better time to buy. Some argue, some see the point, etc.

Ultimately it is about:
1)Price
2)Price
3)Price
4)Condition

My argument is always this:

The average person needs to be able to afford the average home using a normal mortgage and without spending 60% of their pretax money on housing. When that condition is achieved, THEN we will return to a normal market.

I meet a lot of bottom-callers, of course. They are the heretics of my church - the false prophets (profits?).

They risk the inquisition, where - I pepper them with questions about economics and finance. That's when they realize that I am an educated consumer. I do it Columbo style; 'scuse me sir, I have just one more question, if you don't mind...

Watching a bottom-caller squirm is better than a lap dance.

Brian

November 03, 2007 1:46 PM<<<<

ha ha ha, I love it.....great idea......go in and get some free cookies, and coffee at the open houses, and at first act like the dumb american, then they start in on their spiel, then let them have it with a dose of reality........works for me..

Anonymous said...

Don't offer 50% here, they'll take it and then you'll be stuck in the exurbs.
http://www.rylandsavings.com/va_washington-dc-virginia.html#CentrevilleCrossing
Was $592K now $309, 2889 sq ft

Anonymous said...

HOUSING ARMAGEDDON!!!

Frank@Scottsdale-Sucks.com said...

We do it just for fun, looking at $2M+ houses at least gets us motivated to work harder and get that much closer to paying cash for one.

Dropping by open houses is fun because at least half the realtors have heard of me or my books and get all excited when I tell them my name. It's a break from the boredom I guess because 99% of the time there's nobody else coming in to look.

Happy Homedebtor said...

Keith was far from alone in calling the crash. He's just screaming the loudest. Worship him as God if you want - he's no dumber or worse than Allah or Jesus or any other evangelist today.

As for that link for 40% off, that site doesn't work, so I call bullshit.

I'm gonna say that for the DC area, NOT COUNTING the stupidity of BFE Virginia where you have to travel THROUGH Fairfax's clusterfuq of traffic, SFH's will be down about 20% from peak in raw dollar figures, +/- 5% for MoCo/Columbia going down less and PG going down more. In terms of inflation adjusted? The real #s won't be available for years until they've re-analyzed the full data, but it wouldn't surprise me to see a 50% inflation-adjusted drop before it starts moving ahead in retrospect. Alas for those of you priced out, you're still gonna be screwed - you can't time the market reliably, period.

Anonymous said...

I've been doing it for more than a year now.

Anonymous said...

I found the Ryland Site.

http://www.rylandsavings.com/va_washington-dc-virginia.html

Crazy #'s!! Like the previous post says!!

Anonymous said...

http://www.rylandsavings.com

50% OFF HOMES!

keith said...

Someone show me a listing of a home in America that I could buy today for cash, and rent out for more than 6% rental yield

Or one that I could finance with 100% down, and after all costs, rent out for positive cash flow.

Just one listing. Just one.

eagle eye said...

We make a regular practice of visiting new construction. Many spec homes just sitting empty.

We put in an offer on a local spec home at 15% off the asking price of $390K.

THEY REJECTED OUR OFFER!

It still sitting there empty, I just don't get it.

Anonymous said...

Sorry for the anon but it looks like I'd have to expend effort to get an ID, and who wants to do that? I like your blog and have been reading it for a while - it's always nice to see common sense and reason clash with what's perceived to be the current reality.

Just happened to check out the comments on this posting and...

keith said...

Someone show me a listing of a home in America that I could buy today for cash, and rent out for more than 6% rental yield

Or one that I could finance with 100% down, and after all costs, rent out for positive cash flow.

Just one listing. Just one.


This one will rent for between $550-600 - I'd probably consider it myself if I wasn't closing on another property in two weeks.

(550*12)/44900 = 14.6%

http://tinyurl.com/2uxdl7

raynla said...

greyhound said...

9 lot developement. 4 Lots built out. 1 apparently sold. Other 3 90-99% finished. Work has stopped. Original asking price 499K. Now asking 459K. These are well built 2800sf, homes by a respected developer on 3+ acre wooded lots. Homes are 20 miles from my ideal area however the homes are easily 100K more home than local area and priced 100K less. Lot of pressure from wife. Wants to offer 429K. Thoughts?
???????????????????????????????????

Is your wife's name Suzanne?

RayNLA

LM said...

Someone show me a listing of a home in America that I could buy today for cash, and rent out for more than 6% rental yield

Or one that I could finance with 100% down, and after all costs, rent out for positive cash flow.

Just one listing. Just one.
_________________________________

I am buying places that go for 90- 100x rent. Not telling you where...;) but they are out there.

Happy Homedebtor said...

Keith keith keith keith keith...what are we going to do with you and the sheeple that blindly follow your insane calculations?

In the real world, real estate is a long-term investment. You're exhibit-A of the ADHD/Gen-Y generation that has no patience or clue - NOWNOWNOW! I'm gonna take a nap, wake me when I'm rich, kthxbuhbye.

Black Friday deals are just over the horizon, woohoo!

Anonymous said...

...hmmm


$429,000 / 2,800 sf = 153 SF.

Dump the wife.

russdog777 said...

Realtors make my skin crawl. I try and stay away from them but when I have to be near one I hold on to my wallet...

So No, I don't go to open houses just for fun. You think that is fun you need to get a life and some therapy. Unless of course you think there might be money in negotiating a desperate realtor into selling you a good house for really cheap.

Seeing them sweat.. gnashing their teeth... Insulting them with lowball offers...Hmmm.. Well maybe that would be profitable at least if you can drive a good bargain. But I don't think you can get the best bargains yet,

Nah, I Hate realtors. Sick my dog on them instead.

Anonymous said...

"Lot of pressure from wife. Wants to offer 429K. Thoughts?"

If you have to ask advice from a bunch of people you don't know, you are already screwed. Take your medicine and buy the frickin' house. Then nurse your beer,watch your sports, and harbor that resentment for letting yourself be manipulated into a bad decision.

I have three little boys. I'm teaching them not to be manipulated by the female-ocracy.
My wife used to be in a fog but is no longer and sees the light. My mother-in-law doesn't see but lives two states away, thankfully.

Anonymous said...

Happy Homedebtor,

Since I'm not buying, you just go out and buy an overpriced house for me right now. I'll be by down the road to buy it from you.
BTW I'm expecting a hefty discount. Don't forget to water the lawn til then!

Anonymous said...

I live in Bakersfield, home town of bubble boy himself, David Crisp...Maybe it is just my little street, but rent is going for $1200 - $1400 and house prices have dropped from $335,000 at the peak in 2006 to $200,000 now, for 1400 to 1600 sq. ft. houses. I owe $184,000 on mine, and our mortgage is $1350 a month - PITI - for a 30 year fixed at 6.125%.

Once house prices drop below $180,000, it will be cheaper to own in our area than rent. Maybe we are bottoming out faster, maybe I am just overly optimistic, or maybe I just don't want to be upside down, but I am hoping that once renting costs more than owning, there will be some who will chose to purchase. I hope that signals the bottom of the market for our area.

As far as there being an overflow of rental houses out there sitting empty, I have not seen that here much. The builders are sitting on tons of inventory, but they are not renting them out. There are thousands of homes on the market for sale, but they are empty of renters. They are foreclosures and desperation sales by people who went out and bought another house before selling their first one. They need them sold, not rented out.

Add to the formula all the people who have lost their homes - who now make a large number of new renters with bad credit - and you have a formula for rent going up and up. Not negotiating down. People with rentals available are filing thru applications from numerous people, all with bad credit. All the people who never should have bought are turning back into renters with bad credit. There is a flood of them now and more coming. It is a great time to own a rental, but the worst time ever to buy or sell a house. Rental owners will be soaking people for high rent because they can. Most of the people who bought and need to sell cannot rent out their surplus homes bcause they just cannot do that financially - lots of foreclosures, lots of new renters with bad credit, not enough rentals to go around, rents will go up.

IMHO

Andrew Hac said...

"Happy Homedebtor", you are an idiot. Stop blabbering that mouth of yours. Go and get a second job at Taco Bell to pay for the Interest-Only Monkey that you carry on your back right now. Happy Homedebtor MY ASS ! How can you be happy when you are in debt ? Isn't that an OXYMORON ?